ISTANBUL — A sudden rush by investors to withdraw money from Turkish investment funds has exposed a deeper market problem involving concentrated stock positions, liquidity risks and alleged market manipulation, prompting regulators to shut down and liquidate more than 100 funds.
What began with redemption problems at Pusula Portföy and Tera Portföy quickly spilled into Turkey’s stock market, sending the benchmark BIST 100 sharply lower and forcing authorities to intervene.
The Capital Markets Board, or SPK, has ordered the liquidation of funds managed by seven portfolio companies and brought in two of Turkey’s largest banks to oversee the process.
The affected funds represent hundreds of billions of Turkish lira in assets and hundreds of thousands of investor accounts, making the episode one of the most significant recent tests for Turkey’s capital markets.
The panic started with investors demanding their money
The immediate trigger was a liquidity problem.
Pusula disclosed that some of its funds could not meet redemption payments on time after a wave of investors sought to withdraw their money. Tera subsequently reported similar difficulties involving two funds.
That created a classic liquidity problem.
A fund may hold assets that appear valuable on paper but cannot necessarily be sold quickly without pushing their market prices sharply lower.
When large numbers of investors request cash simultaneously, managers may have to sell assets into a falling market.
That can create a dangerous cycle:
redemptions increase → funds sell shares → prices fall → portfolio values decline → more investors withdraw.
That cycle helped turn problems at individual funds into a broader market selloff.
BIST 100 suffered a sharp shock
The pressure reached the wider Turkish stock market on Sept. 16.
The BIST 100 index dropped more than 5%, while investors withdrew as much as $1 billion from local investment funds in a single day, according to figures cited by the Financial Times.
Reuters reported that Turkish authorities responded by introducing measures designed to stabilize the market and prevent the fund liquidity problem from spreading.
By the end of the week, the benchmark had suffered its worst weekly performance since March 2025, according to the Financial Times.
The speed of the decline raised concerns among investors about whether the fund problems were isolated or evidence of deeper weaknesses in Turkey’s capital markets.
Then regulators moved against 130-plus funds
On Sept. 17, Turkey’s SPK ordered the liquidation of investment funds established by seven portfolio-management companies.
The initial regulatory announcement referred to 130 funds, while subsequent rules and liquidation procedures covered 131 funds. This difference reflects updates in the regulatory process and is why reports have used both numbers.
The seven portfolio managers are:
- Tera Portföy
- Pusula Portföy
- Hedef Portföy
- Atlas Portföy
- A1 Capital
- Pardus Portföy
- Bulls Portföy
The funds were closed to transactions on the Turkish Electronic Fund Trading Platform, or TEFAS, as regulators moved to protect investors and prevent additional forced selling.
The scale is enormous
Estimates vary depending on the measurement date and whether the calculation refers to assets, accounts or individual investors.
Reuters cited a figure of approximately 891 billion Turkish lira, while the Financial Times reported roughly $17 billion across the affected funds. Other Turkish reporting has used somewhat different totals.
The number of investors is also being reported differently.
The Financial Times cited approximately 300,000 investors across more than 500,000 accounts, while Reuters cited roughly 353,000 investors.
The difference matters because one person can hold multiple investment accounts.
What is not in dispute is the scale: hundreds of thousands of investors and tens of billions of dollars in assets have been caught up in the liquidation process.
İş Bankası and Ziraat Bank take control of the liquidation
Turkey has assigned two major banks to manage the winding down of the affected funds.
Türkiye İş Bankası will handle the funds established by Tera Portföy.
Ziraat Bankası, the state-owned lender, will oversee funds established by the other six portfolio managers, including Pusula.
Under the SPK’s framework, fund assets will be converted into cash while considering market conditions and investor interests.
The proceeds are then to be transferred to investors according to their holdings.
The regulator says the liquidation should normally be completed within three months, although the period can be extended with approval.
But the real story goes deeper than a liquidity shortage
The fund panic has raised questions about how some Turkish investment funds generated extraordinary returns before the crisis.
The Financial Times reported that some funds had built concentrated positions in related or affiliated companies, particularly companies with relatively small amounts of shares freely traded on the market.
Heavy buying in those stocks could push prices higher, increasing the reported value of the funds holding them.
Those strong returns could then attract more investors, providing additional capital for further purchases.
When investors began demanding their money back, however, the mechanism could work in reverse.
This is one of the central issues now being examined by Turkish regulators.
Pusula became the first major pressure point
Pusula Portföy was one of the most prominent firms caught in the turmoil.
The Financial Times reported that Pusula had approximately $13 billion under management at the end of August and that some of its funds posted extraordinary gains earlier in 2026.
Two prominent Pusula funds reportedly gained more than 140% during the first seven months of the year, according to the Financial Times.
Such returns helped attract investors, but they also drew scrutiny because of the concentration of some portfolios in relatively illiquid shares.
Once investors began seeking redemptions, the funds faced the difficult task of converting those holdings into cash.
Tera was pulled into the crisis too
Tera Portföy became another major focus as the liquidity pressure spread.
The Financial Times reported that Tera Group had more than 500,000 investment accounts and that Tera and Pusula together managed approximately $27 billion at the end of August.
Tera’s exposure to shares of Destek Finans Faktoring has also attracted regulatory scrutiny.
Turkey’s Capital Markets Board subsequently filed criminal complaints against 38 individuals over alleged manipulation involving shares of Katilimevim, Gündoğdu Gıda and Destek Finans Faktoring.
Pusula Portföy itself received a two-year trading ban in the regulatory action.
The allegations remain subject to investigation and legal proceedings. A regulatory ban or criminal complaint does not by itself establish guilt.
Why illiquid stocks became such a problem
The underlying issue is liquidity.
Imagine a fund owns a large percentage of a company’s publicly traded shares.
If only a relatively small number of shares are actively available for trading, even modest selling pressure can cause the stock price to fall sharply.
Now imagine several funds trying to sell similar positions simultaneously.
The result can be a dramatic decline in market value.
That creates a problem for funds because their reported net asset value depends partly on the market value of the securities they hold.
A falling share price therefore reduces the value of the fund at precisely the moment investors are demanding cash.
Regulators had already raised concerns
The market turmoil did not emerge entirely without warning.
The Financial Times reported that MSCI had warned in June about possible “co-ordinated trading behaviour” affecting Turkish equities.
The SPK has also said it observed instances in which certain funds appeared to contribute to share-price movements that could not be adequately explained by companies’ economic fundamentals.
Turkey’s regulator subsequently intensified its scrutiny of the sector.
The current crisis has therefore become both a liquidity event and a regulatory investigation into how certain funds and stocks were valued and traded.
The alleged manipulation investigation expands
On Sept. 17, the Capital Markets Board announced criminal complaints against 38 people and imposed two-year trading bans connected with three listed companies.
The companies were:
- Katilimevim
- Gündoğdu Gıda
- Destek Finans Faktoring
Pusula Portföy was also included in the regulatory action.
Reuters reported that the three stocks remained substantially higher for the year despite their recent declines.
That matters because it illustrates how quickly the market’s valuation of some companies changed once the selling pressure began.
Authorities say the problem is contained
Turkey’s government has tried to reassure investors that the episode does not represent a systemic banking crisis.
Finance Minister Mehmet Şimşek said the affected portion of the investment-fund industry had effectively been placed under control and that the remaining portion of the sector continued to operate normally.
Daily Sabah reported that Şimşek said the liquidation of approximately $18.3 billion in funds would not create significant pressure on Borsa Istanbul because regulatory changes were intended to prevent contagion.
The government has also provided liquidity support to the banking system as part of its response.
Reuters reported that authorities acted to support financial stability after the fund problems contributed to the market selloff.
But investors are still facing uncertainty
The biggest question for investors is how much of their money they will ultimately recover and how quickly.
The SPK says assets will be sold under a controlled liquidation process and proceeds distributed according to investors’ holdings.
But the final amount returned to investors depends on the value that can be realized from the underlying assets.
That is particularly important for funds holding relatively illiquid shares.
If assets have to be sold during a period of heavy market pressure, liquidation prices can differ substantially from previous reported valuations.
The crisis has exposed a broader weakness
Turkey has spent years trying to attract more domestic investment into its stock market while simultaneously battling high inflation and elevated borrowing costs.
The Financial Times reported that Turkish companies increasingly relied on equity markets for financing as tight monetary policy kept conventional borrowing expensive.
In the first eight months of 2026, 34 companies completed initial public offerings worth about 82.4 billion lira, according to the report.
That makes investor confidence particularly important.
A prolonged loss of confidence in investment funds could affect not only existing investors but also companies hoping to raise capital through Turkey’s stock market.
What happens next?
Turkey’s immediate task is to complete the liquidation without triggering another wave of forced selling.
The authorities have created a controlled process, appointed major banks to manage the funds and imposed restrictions on trading in the affected portfolios.
At the same time, prosecutors and regulators are continuing to investigate alleged manipulation and other capital-market violations.
As of the latest reports, several people have been detained or jailed, while dozens more have faced travel restrictions or asset measures.
The legal investigation will ultimately determine which individuals or companies, if any, are responsible for violations.
For the markets, however, the immediate challenge is more straightforward:
Can Turkey unwind roughly $17 billion to $18 billion of troubled fund assets without turning a liquidity crisis into a wider financial shock?
The answer will depend on how quickly assets can be sold, how investors are paid and whether regulators can prevent similar concentration and liquidity problems from emerging elsewhere.
For now, the Pusula-Tera episode has transformed a fund redemption problem into a full-scale test of Turkey’s capital-market safeguards — with hundreds of thousands of investors waiting to see what their portfolios are ultimately worth.
